When Presidents Comment on the Market

While it’s not the president’s job to comment on the equity market, it happens.

And it happens that Donald Trump comments more often than most, given that he enjoys taking credit for the high stock prices since his election. Of course, that might come back to bite him when the market takes another dive, but he’s characterized the recent volatility as a ‘tremendous’ buying opportunity. But what have other presidents had to say about the market?

In March 2009, six days before the nadir of the financial crisis, President Barack Obama suggested that P/E ratios were getting to a point “where buying stocks is potentially a good idea.” He made this comment a day after the Dow had dropped below 7000 for the first time since 2007.

Steffan Schmidt, professor of political science at Iowa State University, says“It is not unheard of to have presidents comment on the stock market, even though it’s not considered to be a good idea. It can actually spook investors.” That said, he took Obama’s advice and bought shares in 2009. He was pleased with the outcome.

Other presidents have also made pronouncements on the market. In 1978, President Jimmy Carter was glum when confronting the energy crisis facing the country. “I think that until the question of energy is resolved, the uncertainty about this subject and the realization that our excessive imports of oil or adverse balance of trade is going to be permanent, those two things are going to contribute to the deleterious effects of increasing interest rates and also uncertainty in the stock market,” said Carter.

On “Black Monday” in 1987, President Ronald Reagan blamed a high federal deficit for one of the biggest one-day declines in the history of the Dow, which fell by 23%. President Bill Clinton was more circumspect in an October 1997 speech on the strength of the US economy following a 554-point loss for the Dow (the biggest point loss ever) the day before that had suspended trading on the US market temporarily. According to Clinton, “It may be disappointing, but I think it is neither prudent nor appropriate for any president to comment on the hour-by-hour or the day-by-day movements of the market.”